Design for a blockchain based authentication system
1. User initiates login request to server
2. Server responds with an amount, a random number and a wallet
address
3. If the user agrees to the amount, she transfers from her own wallet
to the given wallet address, including the random number as a
message attached to the transaction
4. The server monitors transactions to its wallet address and when
the transaction is complete then the user is considered
authenticated
Currency requirements
1. Transactions must be immediate. Bitcoin would take an hour to
perform a login, which is not acceptable for most use-cases. :)
2. Transactions must be able to include messages or other customizable
metadata. This could be worked around by using the amount as the
random number (with very small amounts).
3. Transactions should be very cheap. A login is a very small and
frequent operation.
Caveats
1. There may be anonymity issues with this. Since the blockchain is
public record, everyone will be able to see your pattern of logins.
This could be mitigated by using new wallets, but I haven't thought
out exactly how yet.
2. Design of the underlying cryptocurrency is critical. Many of the
available parameters (block size, transaction fees) will have
major impacts on the success of the system.
Open questions
1. Is proof-of-stake a viable option for this?
2. Are there any cryptocurrencies today that meet this system's needs?
3. Has this been attempted before by anyone else?
